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Netflix’s Upward Growth Momentum Continues in US


Jan. 22 2019, Updated 8:13 a.m. ET

Netflix continues to add new subscribers in the United States

Netflix (NFLX) added 1.5 million paid members in the United States in the fourth quarter of 2018. The company ended the quarter with 58.5 million paid memberships. The company earned revenues of $1.9 million in the fourth quarter, up by 22.4% year-over-year. It had a contribution profit of $590 million with a contribution margin of 29.6% in the fourth quarter.

Recently, the company also raised its prices for new subscribers in the United States. As a part of this price hike, the company’s most popular plan saw a price hike from $11.00 per month to $13.00 per month. In 2018, Netflix also increased prices for its plans in other territories internationally including Canada, Argentina, and Japan (EWJ). The company expects to implement the price increase in a phased manner for its existing subscribers in the first and second quarter of 2019. It’s important to note here that Netflix’s increase in price for its most popular plan is still below HBO’s (T) subscription price of $15 per month. The company expects that the new price rise will lift its average selling price.

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Key factors that have contributed to Netflix’s growth

According to the company, it’s currently earning 10% of its viewers’ screen time in the United States and slightly less than that when it comes to mobile screens. According to Netflix, in October last year, when YouTube (GOOG) was down for some time globally, it observed a spike in viewership and new signups for its streaming service.

With the aim of increasing its penetration in the United States, the company is also bundling its application with Comcast’s (CMCSA) X1 and T-Mobile (TMUS).

Content has been an important factor in Netflix’s growth. As a result, the company is concentrating on different genres including movies, unscripted and scripted shows, and interactive storytelling formats like Black Mirror: Bandersnatch.


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